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Washington State recently introduced a new tax which has the unusual property of allowing a one-time opt out if you purchase private insurance instead:

Under current law, you have one opportunity to opt out of this tax by having a long-term care insurance (LTCi) policy in place by November 1st, 2021.

Is this the only example of such a tax in modern history? Specifically, I'm looking for examples of taxes where:

  1. The government introduced some sort of permanent tax (or any other mandatory charge - the exact wording doesn't matter)
  2. Any local citizen was allowed to opt-out of the tax permanently or for an extended (10+ years) period of time

Or perhaps this is a common practice and there's a term used to describe these kinds of tax opt-outs?

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  • This sounds analogous to a slightly delayed grandfather clause. Those who have an existing LTCi policy can have that grandfathered in so they don't need to be a part of the new system. The main wrinkle is that the cutoff is well after the passage of the bill, so you can choose to get a policy after passage
    – divibisan
    May 21, 2021 at 0:10
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    It's not quite accurate to frame this a "tax" with an opt-out. It's an insurance program funded with a dedicated tax, and the whole program can be opted out-of. May 21, 2021 at 0:23
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    My point is not that it's not a tax, but that you're not opting out of a tax, you're opting out of an entire program, and the tax is one part of it. May 21, 2021 at 1:38
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    Would church tax in Germany count? It's a tax which only applies to people who are members of certain religious organisations. Membership is usually acquired by getting baptized as an infant. But people can opt-out by declaring to the bureau of finance that they are no longer a member.
    – Philipp
    May 21, 2021 at 7:20
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    It seems similar to the ACA's "individual mandate". If you get private insurance you don't have to pay this tax. (It's moot these days, since the amount of the tax was dropped to 0 a few years ago, and this has led to a SCOTUS challenge to the ACA.)
    – Barmar
    May 21, 2021 at 13:10

1 Answer 1

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No, it is not unique; Social Security has similar provisions

The new tax is also tied to a new benefit, in the form of "long term care benefits" provided by the state of Washington. The opt-out is for people who are choosing not to participate in this program.

Social Security provided by the US federal government is also funded by special taxes, and they can also be opted out of if you are eligible and choose to opt out of Social Security benefits. The number of people who are eligible to do this is extremely small; mainly ordained ministers and other people who have a religious objection to receiving government transfer payments without having taken a vow of poverty (and no, you can't just make a new religion up for that). That so few people can do it is why you've probably never heard of this before.

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    Is it a permanent opt-out? So if you leave the priesthood you're still exempt?
    – Barmar
    May 21, 2021 at 15:56
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    @Barmar If you are granted an exemption, you have 60 days to notify the IRS if the situation under Form 4029 no longer applies (irs.gov/pub/irs-pdf/f4029.pdf) e.g. if you leave the priesthood or decide you don't follow whatever teachings lead you to apply for the exemption.
    – Joe
    May 21, 2021 at 16:03

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